Covered Lives Assessment = A Hidden Tax!

New York imposes four taxes on employers and individuals who buy private health insurance coverage. In 2019, these taxes amounted to an estimated $5.2 billion. They are paid by consumers and included in their health insurance premiums, totaling 6-9% of premium costs or about $1,000 per family policy.

Covered lives assessment = $1 billion each Year

The Covered Lives Assessment (CLA) is an annual flat surcharge (a tax) on everyone in New York with  private health insurance. Health insurance plans pay this tax based on the number of people they cover and where they live. The cost of this tax is included in the individual and family premiums. When it was initiated in 1996, the CLA was intended to pay for graduate medical school expenses. Since then, increasing sums generated by the tax have been used for the State’s general fund obligations.  In 2019, New Yorkers with private health insurance paid approximately $1 billion for the Covered Lives Assessment.

HCRA Surcharge = $3.6 Billion each year

The Health Care Reform Act (HCRA) surcharge is a sales tax health insurers pay on certain hospital-based health services.  It  was originally designed to help reimburse hospitals for losses incurred by bad debt and charity care. Today, it is used for a variety of general fund purposes. It yielded $3.6 billion in 2019.

Assessment On Insurers = $148 million each year

The third levy, called a Section 206 assessment, was created to finance the State’s oversight of insurance companies. All licensed insurers in New York (e.g., life, property and casualty, and health) pay this tax based on the premiums they collect. In 2019, New Yorkers with private health insurance paid approximately $148 million to finance the New York State Department of Financial Services.

Premium Tax = $479 million Each Year

Private, for-profit health insurers pay a 1.75 percent tax on the premiums they collect. The estimated $479 million raised supports New York’s general fund obligations.